Financial Data and Key Metrics Changes - In Q2 2024, net sales totaled $33.9 million, a 3.2% decrease from $35 million in Q2 2023 [10] - For the first six months of 2024, net sales were $68.1 million, down 2.6% from $69.9 million in the same period of 2023 [10] - Gross profit for Q2 2024 was $4.6 million, representing 13.6% of net sales, compared to $5.5 million or 15.6% in Q2 2023 [11] - Adjusted EBITDA for Q2 2024 was $919,000, down from $1.6 million in Q2 2023 [14] - Cash and cash equivalents as of June 30, 2024, totaled $1.5 million, down from $1.7 million at the end of 2023 [14] Business Line Data and Key Metrics Changes - Revenue from medical customers decreased due to inventory reductions and delayed product launches, while aerospace and defense categories showed strong revenue growth [10][11] - Operating expenses were marginally lower due to reduced incentive compensation accruals, offsetting increased payroll costs [12] Market Data and Key Metrics Changes - There was a noted reduction in customer backlog in Q2 2024 as purchasing patterns changed, with customers requesting shorter lead times [11] - The company is experiencing strong customer engagement as supply chain normalization encourages nearshoring [5] Company Strategy and Development Direction - The company is focusing on long-term growth through facility consolidation and investment in business development, expecting annual savings of at least $1.6 million starting in 2025 [6][12] - A three-tier global manufacturing strategy in the U.S., Mexico, and China is being utilized to enhance competitiveness and customer service [8] - The company is investing in engineering expertise and product innovation, particularly in fiber optic technology, to meet evolving customer needs [18][20] Management's Comments on Operating Environment and Future Outlook - Management noted challenges in visibility to customer orders and inventory balancing among medical and industrial customers, but remains optimistic about aerospace and defense sectors [4][10] - The company anticipates stabilization in supply chain and customer orders, supporting continued sales momentum in 2024 [22] Other Important Information - The closure of the Blue Earth facility is on schedule, with expected restructuring costs between $750,000 and $850,000 in 2024 [12] - The company is increasing inventory levels in anticipation of the transition of production from the Blue Earth facility to Bemidji [13] Q&A Session Summary - There were no questions during the Q&A session, and the call concluded with management expressing gratitude for participation and looking forward to the next earnings report in November [22][23]
Nortech Systems(NSYS) - 2024 Q2 - Earnings Call Transcript